TaxTMI 
TaxTMI 
2009 (4) TMI 323
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.... (formerly known as Sujana Steels Ltd.) Casting Division v. The Commissioner of Customs & Central Excise, Hyderabad-I Commissionerate Duty: Rs. 67,87,021/- Recovery of Rs. 1,91,676/- irregularly availed as Modvat credit on HM Scrap. Redemption Fine : Rs. 10,00,000/- Penalty : Rs. 10,00,000/- Interest on Rs. 67,87,021/- u/s 11AB Interest on Rs. 1,91,676/- u/r 57-I(5) 2. E/03/2006 Mr. Y.S. Chowdary, Chairman M/s. Sujana Steels Ltd. v. CC&CE, Hyderabad-I Penalty of Rs. 5,00,000/- 3. E/04/2006 Mr. R.K. Birla, Director (Operations) v. CC&CE, Hyderabad-I Penalty of Rs. 3,00,000/- 4. E/05/2006 Mr. C.H. Jawahar Babu, Chief Executive v. CC&CE, Hyderabad-I Penalty of Rs. 3,00,000/- 5. E/06/2006 Mr. P. Surendra v. CC&CE, Hyderabad-I Penalty of Rs. 3,00,000/- 6. E/07/2006 Mr. G. Rama Krishna v. CC&CE, Hyderabad-I Penalty of Rs. 3,00,000/- 7. E/08/2006 Mr. P. Mallikarjuna Reddy, Chief Executive v. CC&CE, Hyderabad-I Penalty of Rs. 3,00,000/- 8. E/09/2006 Mr. M.K. Chaturvedi, Sales Manager v. CC&CE, Hyderabad-I Penalty of Rs. 50,000/- 9. E/10/2006 Mr. Joseph v. CC&CE, Hyderabad-I Penalty of Rs. 50,000/- 10. E/11/2006 Mr. A.K. Ranu Labour ....
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....r Casting Division. In respect of their Re-rolling Units, the raw material namely Re-rollable scrap was also procured by way of imports and also by purchasing local scrap from various local scrap dealers. 4.1 Detailed investigation was conducted with regard to the activities of the assessee's units and others, who are the noticees. This culminated in the issue of two Show Cause Notices - one dated 17-1-1997 issued by the Commissioner of Central Excise, Hyderabad and the other dated 2-5-1997 followed by a Corrigendum dated 3-9-1997. Both these Show Cause Notices were adjudicated by the Commissioner of Central Excise, Hyderabad and a common order was passed in the impugned Order-in-Original. The main charge in the first Show Cause Notice relates to the clandestine production and removal. The Commissioner has dealt with all the aspects and came to the conclusion that the assessees are liable to pay a differential duty amounting to Rs. 67,87,021/-. He has appropriated the amount of Rs. 12,00,000/- already, paid by them and adjusted the same towards the duty confirmed. He has also confiscated the amounts frozen in the bank accounts of M/s. Shree Trading and M/s. MRK Enterprises to the ....
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....ivision in the absence of records, which were seized by the Department. Mr. Azizuddin has also given similar statements. 4.3 It was further stated that the Department has included alleged purchase of scrap during the period 1996-1997. It was submitted that the impugned period of the SCN is 1993-94 to 1995-96. Our attention was invited to Table No. 1 in internal page no. 37 of the SCN dated 17-1-1997. It was also stated that the party had not imported any HM Scrap during the said period. It is the contention of the learned Advocate that Table 1 mentioned in page 116 of the paper book or internal page 37 of SCN dated 17-1-1997 includes the purchases made by SSL (Casting Division) as well as SSL (Trading Division). When the Purchase Invoices of M/s. Pirani Steels and M/s. Mawani & Co. were produced during cross-examination, both Mr. Murad and Mr. Azizuddin admitted that they sold local scrap both to SSL (Casting Division) as well as SSL (Trading Division). The scrap purchased by SSL (Casting Division) is utilized in the manufacture of Ingots and the scrap purchased by SSL (Trading Division) is utilized for trading. However, the quantities sold by M/s. Pirani Steels and M/s. Mawani &....
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....durai - 2002 (142) E.LT. 128 (T). 4.5 Assuming but not admitting that the appellant-company had manufactured Ingots weighing 2342.250 MTs. on which duty of Rs. 30,85,985/- has been demanded, the learned Commissioner ought to have given Cenvat credit of the said amount before arriving at the net duty payable by the appellant-company. However, he has not given any such credit, to which the appellants were entitled. The following case-laws were relied on :- (a) Chamundi Steel Re-rolling Mills v. CCE - 1996 (81) E.L.T. 563 (b) Vivek Re-rolling Mills v. CCE - 1994 (73) E.L.T. 660 (T) (c) Apex Steels (P) Ltd. v. CCE - 1995 (80) E.L.T. 368 (d) Railtech v. CCE - 1996 (85) E.L.T. 267 (CEGAT 3 Member Bench) (e) Phoenix Mills v. CCE - 1999 (113) E.L.T. 1018 (T) In the decisions cited above, it has been inter alia held that if the product is held to be excisable and chargeable to duty, the assessee would be eligible to avail Modvat credit on the duty paid inputs irrespective of the fact whether a declaration under Rule 57G of the Central Excise Rules, was filed or not and the procedures prescribed were followed or not, subject to the production of duty paying documents by the assessee t....
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....ocal scrap sold by M/s. Pirani Steels and M/s. Mawani & Co. Therefore, it was urged that the appellant-company as well as their various Executives have not violated the provisions of Rule 209A of the Central Excise Rules. Further, no specific allegation has been made against the said Company or each one of the Executives that they had knowledge or had reasons to believe that they were dealing with such excisable goods, which were liable for confiscation under the Central Excise Act, or the Rules made thereunder. The following case-laws were relied on :- (a) Killick Nixon Ltd. v. CCE, Aurangabad - 1998 (97) E.L.T. 436 (T) (b) Standard Pencils Pvt. Ltd. v. CCE, Madras - 1996 (86) E.L.T. 245 (T) (c) Tolaram Electronics & Ors. v. CCE, Ahmedabad - 1999 (108) E.L.T. 277 (Tribunal) = 1999 (33) RLT 558 (T) (d) Ashok India Engineering Works v. CCE, Bombay - 1998 (98) E.L.T. 659 (T) (e) Standard Surfactants Ltd. v. CCE, Kanpur - 1998 (103) E.L.T. 675 (T). 4.8 Reliance was also placed on the decision of the Hon'ble Tribunal in the case of Z.U. Alvi, GM, BHEL v. CCE, Bhopal - 2000 (117) E.L.T. 69 (T) = 2000 (36) RLT 721 (CEGAT) with regard to the imposition of excessive penalties. 5. Th....
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....rs of the finished goods have also admitted the receipt of the finished goods without proper documents and payments made in cash. (8) (a) As per private records recovered from the residence of Shri Muralidharan, Production Manager, production particulars over and above the RG-I stock of SSL, for the year 1994-1995 alone, was 8521.235 MT for RM II and 6720 MT for RM I. (Annexure III and IIIA to the SCN dated 17-1-97). (b) As per the Bills of the Labour Contractor, Shri A.K. Ranu, the difference between RG-I figures and actual production for which he was paid labour charges, for 14 months, was 6182.192 MT (Annexure IV of SCN dated 17-1-97). (c) Shri Ranu has in his statements dated 11-10-96 and 12-11-96 confirmed suppression of production and clandestine clearances. These pieces of evidence clearly indicate that SSL was systematically suppressing production of Ingots/rolled products. (9) The extent of non-accountal and evasion of duty based on the difference in the receipts of scrap, as confirmed by the OIO, is not so huge as to have been revealed by a substantial difference in electricity consumption or other factors. (10) Belated retractions of statements or retraction at the ti....
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.... claimed to have been transported to Hyderabad were found to be non-transport vehicles viz., fire tender, motor cycle, taxi etc. When such overwhelming evidence was available on record to prove that the goods under reference never reached the factory of M/s. SSL, the Commissioner ought not to have considered the end use certificate alone while deciding the aspect of irregular availment of Modvat credit. If the Commissioner felt it is reasonable to consider the so called end use certificates under reference, he also ought to have given his findings as to how the noticees could bring huge quantity of scrap from Chennai to Hyderabad using non-transporting vehicles. However, the Commissioner's order is totally silent on this aspect. In the circumstances, it appears that the order of the Commissioner as far as non-confirmation of recovery of Rs. 1,15,13,927/- towards irregular availment of Modvat credit on 12,362 MTs. of Heavy Melting Scrap and non-imposition of penalty for irregular availment of Modvat credit does not seem to be legally correct. (2) The Commissioner has imposed penalties on .the following Respondents. Sl. No. Name of the person Penalty imposed 1. Shri P. Mallikar....
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....erified the receipts from time to time. (6) Form XXAs (for sales tax purposes) were filled with wrong particulars by the C&F agents. (7) Several documents were asked for, which have not been provided. 7. Shri Ramanan made the following submissions :- The records maintained by the employees of the respondent-companies were removed to the residential premises of Shri Madhusudan Rao, DEO, a few days before the searches were conducted but were seized by the Department. These records were shown to the employees and statements were recorded. Full details are given in the 'Statements of grounds' to SCN dated 2-5-97. (1) The subject scrap consignments, after import at the Madras Port, were moved to the godowns of the respondents located at Puzhal, Vanagaram, Gummidipoondi, Tondiarpet and BSL plot in the Harbour. (2) The scrap consignments imported in the vessel M.V. Kee Glory were thereafter transported to/transported at the directions of scrap dealers Kabali, Birender and Shyamsunder. (3) The scrap consignments imported in the other 2 vessels were disposed of through M/s. Indoria Steel Corporation. (4) The disposal of the aforesaid scrap has been corroborated by following evidence....
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....I'. Since the respondents have fabricated "paper transactions", through fake documents, to show that the goods have moved to Hyderabad under purportedly normal transport documents, these certificates cannot be taken to prove the actual physical receipt of the said scrap. In any case, the evidence at para 4 above convincingly proves that the said scrap was disposed of at Chennai itself and that fake documents were prepared to show the movement of the said scrap to Hyderabad. Accordingly, these certificates do not reflect actual receipt and consumption of the subject scrap. Reliance is placed on the judgment of the Hon'ble Bombay High Court in Roopkala Export Corporation v. UOI reported in 2004 (165) E.L.T. 26 (Bom.). (7) The documents being asked for cannot erase or cast a doubt on the fact of disposal of the subject scrap in Chennai itself. (8) As for physical verification by jurisdictional officers, the respondents have not substantiated the same. They may be put to strict proof thereof. (9) Belated retractions of statements or retraction at the time of cross-examination after 8 years in this case, has no evidentiary value. Further, no coercion or threat or inducement has been ....
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....ed products. In our view, there is enough circumstantial evidence to hold unaccounted production in respect of 2602.500 MTs. Even though, the original demand was very huge, the Commissioner has scaled it down only to the demand on account of non-accountal of 2602.500 MTs of scrap. In our view, it is a very fair decision and his order is sustainable. But, however, we find that he had not given any allowance for the Modvat credit. According to him, the scrap is converted into Ingots and the Ingots, in turn, is used in the production of re-rolled products. So, while coming to the conclusion on demand of duty, he has not given the benefit of Modvat credit and also the cum-duty benefit. In terms of the Hon'ble Supreme Court's decision in the case of CCE v. Maruti Udyog Ltd. - 2002 (141) E.L.T. 3 (S.C.), this also should be given. In view of this, while upholding the demand of duty on account of non-accountal of the scrap to the extent of 2602.500 MTs, we remand the matter to the Commissioner for re-determining the duty liability. After re-determining the duty liability, he can decide on suitable penalties to be imposed. While imposing penalties, he has to bear in mind the role of each o....
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....ter giving a finding, he can impose suitable penalties. 10. Summing up, as far as the assessees' appeals are concerned, we have only accepted their plea that the Modvat/Cenvat benefit has to be given and also the benefit of cum-duty value. The value, which is taken in respect of the clandestine clearance, should be taken as cum-duty and the duty liability has to be recalculated. On re-calculation, suitable penalties may be imposed on the Noticees. As regards the penalties, we are not giving any finding because on computation of the duty liability and also after hearing the parties concerned, the commissioner can impose the penalties in accordance with law. 11. The entire impugned order considers two Show Cause Notices. One Show Cause Notice relates to suppression of production and clearance. In respect of that, we have upheld the Commissioner's order. But the Commissioner has not given the Modvat or Cenvat benefit and also the cum-duty benefit. Hence, the assessee's appeal is allowed partially by remanding the matter to the Commissioner for recalculation. In view of this, the portion of the order in Sl. No. (i), confirming the duty, gets modified. 11.1 With regard to the penalti....